Consistent with expectations that the CFPB under Director Chopra’s leadership would take an expansive view of its statutory authorities, the CFPB has announced its intention to use its authority to prohibit unfair, deceptive, or abusive acts or practices (UDAAPs) to target discriminatory conduct, even where fair lending laws may not apply.… Continue Reading
Heather S. Klein
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CFPB, federal banking agencies, and other federal agencies issue Interagency Statement on Special Purpose Credit Programs Under the Equal Credit Opportunity Act and Regulation B
Yesterday, eight federal agencies joined together to issue an “Interagency Statement on Special Purpose Credit Programs Under the Equal Credit Opportunity Act and Regulation B” (Interagency Statement). The agencies consist of the CFPB, FDIC, OCC, Federal Reserve Board, NCUA, HUD, DOJ, and FHFA. The Interagency Statement indicates that it is intended “to remind creditors of the ability under the Equal Credit Opportunity Act (ECOA) and Regulation B to establish special purpose credit programs to meet the credit needs of specified classes of persons” and to “call[] attention to the special purpose credit options under ECOA and Regulation B.”… Continue Reading
CFPB to begin examining post-secondary schools that loan directly to students
By John L. Culhane, Jr. & Heather S. Klein on
Posted in CFPB Supervision, Student Loans
The CFPB has announced that it will begin examining post-secondary schools, such as for-profit colleges, that extend private loans directly to students and/or parents to fund undergraduate, graduate, and other forms of postsecondary education. The announcement was accompanied by the CFPB’s issuance of an update to its Education Loan Examination Procedures manual. … Continue Reading
ED recalls federal student loans from private debt collectors
By John L. Culhane, Jr. & Heather S. Klein on
Posted in Dept. of ED, Student Loans
With the return to repayment of federal student loans on February 1, 2022 quickly approaching, the Department of Education’s Office of Federal Student Aid (FSA) recently notified the private collection agencies (PCAs) under contract with FSA to collect Direct Loans that it would begin the process of recalling approximately 5.1 million borrower accounts and winding down the PCAs’ contracts. … Continue Reading
CFPB education loan ombudsman report foreshadows active and wide-ranging engagement by “new CFPB” in student loan market
By John L. Culhane, Jr. & Heather S. Klein on
The CFPB Education Loan Ombudsman has issued his annual report covering the period from September 1, 2020 through August 31, 2021.
The report includes an analysis of the approximately 5,300 complaints related to private or federal student loans that the Bureau received during that period. While complaints overall during this period trended lower, the decrease was most pronounced for federal student loan complaints which decreased approximately 32% compared to the prior year.… Continue Reading
Consumer groups urge CFPB to regulate fee-based earned wage access products as credit
By John L. Culhane, Jr. & Heather S. Klein on
Posted in CFPB, Regulatory and Enforcement
A group of 96 organizations and individuals, who describe themselves as consisting of “consumer, labor, civil rights, legal services, faith, community and financial organizations and academics,” have sent a letter to the CFPB urging the Bureau to regulate fee-based earned wage access (EWA) products as credit subject to the Truth in Lending Act. … Continue Reading
FTC looks to Section 5 penalty offense authority in sending notices to for-profit schools that outline practices found to be unfair or deceptive
By John L. Culhane, Jr. & Heather S. Klein on
Posted in FTC, Regulatory and Enforcement
The FTC announced yesterday that it has sent a “Notice of Penalty Offenses” to 70 for-profit higher education institutions that outlines a number of practices that the FTC has previously found to be unfair or deceptive.
The seven practices outlined in the Notice generally relate to claims made by schools about their graduates’ job and earnings prospects. … Continue Reading
CFPB Alleges Income Share Agreements are Extensions of Credit in Results-Oriented Enforcement Action against ISA Originator
By Heather S. Klein, John L. Culhane, Jr. & Ballard CFS Group on
(Ballard Spahr will hold a webinar on 9/21 at 3pm ET, “The Path Forward for Income Share Agreements.” Register online here.)
The CFPB issued a consent order against an income share agreement (ISA) provider, Better Future Forward (BFF), in which it concluded that BFF’s ISAs are extensions of credit under the Consumer Financial Protection Act and Truth in Lending Act and are “private education loans” under TILA. … Continue Reading
Colorado Private Education Lender Registration Takes Effect September 1, and Schools Using Income Share Agreements Are Covered
By Heather S. Klein, John L. Culhane, Jr. & Ballard CFS Group on
With Colorado’s private education lender registration scheduled to take effect on September 1st, the Colorado Department of Law has just announced that they intend to bring a new group within their jurisdiction: private postsecondary schools that use income share agreements (ISAs) to help finance students’ education. Schools regulated by the Division of Private Occupational Schools received notice of this interpretation on Friday.… Continue Reading
Dept. of Education issues new interpretation on preemption of state laws regulating student loan servicers
By John L. Culhane, Jr. & Heather S. Klein on
The U.S. Department of Education has issued a new interpretation “to revise and clarify its position on the legality of State laws and regulations that govern various aspects of the servicing of Federal student loans.” The new interpretation revokes and supersedes the ED’s 2018 preemption determination. It was not unexpected, as the ED has taken a number of steps in recent months to reverse Trump Administration policies that hindered state oversight of federal student loan servicers. … Continue Reading